High Probability ETF Trading: 7 ETFs You Need to Know for Monday (USO, OIL, DBO, JNK, HYG, EWJ, FXI)

Heading into trading on Monday, many of the most oversold exchange-traded funds are related to the energy market. Three such funds are among our 7 ETFs You Need to Know here at the beginning of the week.

Although the U.S. remains exceptionally overbought, markets around the world have shown some potential for weakness, particularly those country funds with exposure to Asia.

Here are 7 ETFs You Need to Know for Monday.

Pulling back into oversold territory above the 200-day moving average as of Friday’s close were two major oil commodity funds: ^USO^ and the ^OIL^ (below)

OIL chart

OIL has closed lower for three out of the past five trading days. The ETN is at its most oversold since rallying back above the 200-day in late November.

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Also oversold above the 200-day are shares of the ^DBO^.

High yield bonds, referred to last week as a “sweet spot” by Goldman Sachs analysts, have also become increasingly oversold in recent days. Two options for high probability traders include the ^JNK^, which has closed in oversold territory, and the ^HYG^ (below).

HYG chart

Shares of HYG have closed lower for two out of the past three days heading into Monday’s open.

Neither the ^EWJ^ nor the ^FXI^ (below) have pulled back into oversold territory, but both ETFs are close and could be trading at oversold levels by midweek if selling resumes.

FXI chart

The FXI has not been in oversold territory above the 200-day since before the Thanksgiving holiday.

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David Penn is Editor in Chief of TradingMarkets.com